Title
Resolution to Express the City of Ann Arbor's Support for HB 4025, Regarding the Tax Treatment of So-called 'Dark Stores'
Memorandum
So-called 'Dark Stores' are big-box retail spaces that have become vacant and are generally considered to be under-valued for tax purposes. Large retailers have been successful in Michigan at lobbying tax tribunals to lower the assessed value of these properties, arguing that because of their size it is difficult to find tenants and therefore they are not valuable from an income perspective. In many instances retailers apply deed restrictions so that the large buildings cannot be redeveloped once they become vacant, thus strengthening their argument that the properties deserve tax breaks because of the unviability of other development opportunities.
Prior to larger retailers employing this 'Dark Store' theory in their property tax appeals, empty big box stores were valued at $55 per square foot in Michigan. Today, Lowe's stores are valued at $22.10 per square foot while in North Carolina they are valued at $79.08 per square foot. Target stores are valued at $24.97 per square foot, while in Wisconsin they are valued at $61.23. Michigan communities are clearly being hurt by an unfair tax valuation process that favors corporate land owners.
The proposed legislation would make three important changes to the way these properties are valued. First, it would bar tax tribunals from considering deed restrictions when they assess property values. Second, it creates a universal set of valuation criteria for local tax tribunals to consider when valuing the properties. Third, it requires that the value of the property be derived from a comprehensive analysis that includes a cost valuation, a sales comparison valuation, and an income valuation-a three part analysis which is the national standard.
Staff
Prepared by: Howard S. Lazarus, City Administrator
John Fournier, Assistant City Administrator
Body
Wherea...
Click here for full text